The Daily Market Report: Gold Softens Within Range, Ahead of Next Week’s FOMC Meeting

11-Sep (USAGOLD) — Gold edged lower on Friday, ticking briefly below the 1100 level, before rebounding modestly within the range. The yellow metal remains mired in the range ahead of next week’s all-important FOMC meeting.

Of course, March was all-important, as was June. Markets remain divided as to whether or not the Fed will initiate its first rate hike in nearly a decade. In light of the recent data, I remain skeptical.

U.S. PPI was unchanged in August, and while better than the -0.1% that was expected, it remains obvious that the Fed is still a long way from achieving its inflation objective. Producer prices continue to drop at a -0.8% annualized pace.

University of Michigan consumer sentiment disappointed, plunging to 85.7 in September, well below expectations of 94.0, versus 91.9 in August. The Fed will get to look at August retail sales next week before making their decision. Consensus on retail sales is already a soft +0.4%, but there is now considerable risk for a downside miss.

As I wrote yesterday, I am not terribly concerned about a rate hike. The Fed has been adamant that once lift-off is achieved, they will be very slow and methodical about any subsequent hikes.

Additionally, gold performed quite well during the latest tightening campaign, rising more than 80% over the 3-year tightening cycle from June 2004 to September 2007. On some level, I just they would just do it already, so we can end the silly debate about whether the economy can withstand a 0.25% Fed funds rate.